VERITAS COLLEGE OF IROSIN

SAN JULIAN IROSIN SORSOGON

7 TYPES OF BUSINESS STRATEGIES

FOR BUSINESS OWNERS

GROUP 4
Members:

ALONA JEAN P. JURADO

MARIELLE ANNE P. GRATIL

MIALYN BORLAGDAN

SHIELA MAE E. BIBAL

DALIA P.BISCO

JAYPEE F. GIBADA

JHONNEL F. RELLON

GINO R. BALAGUER

BSBA 3A

MRS.LILIAN BARBERAN

INSTRUCTOR
 B usiness strategy is all about how your company positions itself and engages in

activities that can help you gain a competitive advantage. Small business owners should
explore how to allocate resources with each strategy and anticipate what’s to come. Your
mission, vision, and values also come into play and can help you with planning. Here’s
information about seven business strategies that may help grow or stabilize your business.

What is a business strategy?

Business strategy is the collective term for all the steps a business takes to reach its
goals and achieve its mission and vision. It involves understanding what the business
does, what it needs to have, and what it needs to do in order to reach those goals.

That information helps business owners make decisions about resource allocation and
helps set priorities. When everyone within the organization understands the strategy, it
creates a framework to keep the team working in the same direction.

1. Structuralist
By adopting a structuralist strategy, you’ll be building your business operations around
the current market conditions and using the industry structure to your advantage. That
might mean that you order products or supplies using your vendors’ established
processes, or you take barriers to entry into consideration.

2. Growth
If you’re choosing a growth strategy, it means you’re focused on introducing new
products or features or expanding into new markets. Looking for a competitive edge by
offering a unique experience your potential customers won’t find anywhere else? Found
a new customer base through market research or professional networking? That’s when
to consider a growth strategy for your business.

3. Cost Leadership
Becoming a cost leader is a way to set your business apart by offering a competitive
price for your product or service. If you have a unique strategy to lower costs without
 sacrificing quality, use that to set yourself apart in your industry. There are many
benefits to being a cost leader including:

 Cost leaders can charge the lowest amount for a product while remaining profitable

 Cost leaders can withstand recessions better than competitors because they are
experienced in appealing to consumers with budgets in mind

 Cost leaders can be more flexible. Since their costs are low, they can discount prices
more often to attract a larger customer base.

Note that a cost leadership strategy comes with a certain amount of risk. If a competitor
can reduce costs more frequently, it could take away your customers.

4. Differentiation
With a truly unique product or service that you can offer to potential customers, you can
stand out in the market. Differentiation allows a business to take a creative approach
and charge premium prices for products or services.  For example, Starbucks® goes
beyond selling coffee by providing a unique coffee experience in their stores. Strategies
to drive brand differentiation include:

 Emotional response

 Innovation

 Creative presentation

 Unique experience

 Pricing

Product differentiation is important because it can lead to a competitive advantage in

the market. If differentiation was not an option for smaller businesses, larger companies
would always dominate as they have the ability to set the most attractive price.

5. Price-Skimming
Price-skimming strategies involve charging a high price for your product or service at
the start to cover initial costs like production, manufacturing, and marketing. Usually,
this approach makes sense for a business introducing something that hasn’t been done
before and that’s worth a higher price. The advantages of a pricing policy are the ability
to make your product appealing to customers, while covering costs. The disadvantages
of pricing strategies that do not sufficiently appeal to customers will not provide the
income you need to operate successfully.
 6. Acquisition
Acquisition strategies are a way to promote growth by purchasing another business.
This is different from an organic growth strategy, where the focus is growing in-house
products or services. Some reasons to pursue acquisition of another business include:

 Obtaining quality staff or additional skills, knowledge of your industry or sector and other
business intelligence.

 Accessing funds or valuable assets for new development

 Attracting a wider customer base, increasing your market share, and reducing
competition

 Diversification of products or services

 Lowering costs and overheads through shared budgets

Business acquisition can be extremely complex. Be sure to have legal and financial
professionals on your team.

7. Focus
The idea behind focused approaches is that you can choose what segment of the
market you want to target through any of the strategies already covered. If you see an
opportunity to lead in a specific area, narrow in and focus your efforts on pursuing it.
Sometimes, this can pay off more than attempting to capture the entire market through
your business strategy.
7 TYPES OF BUSINESS STRATEGIES FOR BUSINESS OWNERS

Business strategy is a course of action that an entity adopts to grow and prosper. In
layman’s terms, they are specific plans that outline the path that the business will take to
gain a competitive advantage and capture a larger market share. These plans are
developed by business experts who have profound analytical and planning skillsets and
understand the dynamics of the market.
Business strategies prove helpful for every aspect of the organisation, ranging from
marketing and operations to recruitment, sales and distribution. These plans are flexible in
nature and can accommodate changes in the economic conditions and internal operations
to keep the sales momentum going. Every strategy development involves thorough
research, and its implementation requires a proactive team of workers and a competent
leader.
Seven growth strategies have been identified as the most prominent ones that can make a
business successful. Besides these, the organisation must have the required systems and
resources to help execute the plan and a work culture that absorbs the plan effectively. So,
here is everything you must know about them as an aspiring entrepreneur looking for
a business for sale in Sydney or as an established business owner who plans to expand.
1. Product Differentiation Strategy

The uniqueness of the products and services is what makes them attractive to
customers. Without any differentiation, it can be challenging to carve a niche in the
cluttered marketplace that is flooded with similar products. To stand out in the crowd, it is
necessary to become different and offer something valuable that others do not. The
differentiation can be a part of anything ranging from customer service to packaging and
after-sale service.

For example, Nike has positioned itself as a manufacturer of high-quality products that
are considered the gold standard in athletic wear. Although there are several big
competitors like Adidas, Puma, Reebok, etc., it has maintained its position through
innovation in business.

2. Market Penetration Strategy

The market penetration strategy works to increase sales in the current market segment
without making any changes to the products or services. It is the easiest way of boosting
profits without spending too much in return. Thus, it is commonly used by small businesses
that run on a tight budget and helps them to increase their market share.
To ensure the plan is executed without challenges, businesses need to increase production
and distribution. The techniques business owners use to achieve this feat include offering
discounts or lowering the prices compared to the competitors. The pricing tactic helps to
find new buyers and the existing customers are coaxed into buying more products through
loyalty programs.

3. New Product/Feature Strategy

 Product expansion is a time-tested strategy of entrepreneurs that helps them to acquire
new customers in the geographical territory. With the launch of a new product or innovative
features in the existing range, the business can develop a competitive edge for increased
sales. It proves highly successful in times of a technological advancement when the existing
products can become obsolete.
For example, when smartphones started coming with high storage and digital music
libraries, the MP3 players became redundant. Thus, the tech giant Apple continued its
innovation and replaced its revolutionary iPod with iPhone in 2009. They had foreseen the
future of music consumption and the power of smartphones and offered Apple Music on
their mobile phones to stay relevant in the market.

4. Market Segmentation Strategy

Most business owners conduct market research to identify customer behaviour and
satisfaction levels. During this survey, they can define the demographics of the market and
identify the segments that are using their products or are interested in their offerings. Thus,
they can segment the market into various sections based on their age group or occupation
and then cater to them according to their needs.
For example, a business selling softening cream for hands was targeting women between
the ages of 30 and 60 years, but during the research, they found that girls in the age group
of 18 to 30 were also interested in the product. Thus, they found a new segment in the
market to increase their sales.

5. Price Skimming Strategy

The price skimming strategy is adopted by businesses that are entering the market with a
new product and placing it in the premium category. The high price tag of the product helps
them to recover the cost of production, distribution, and marketing in the introduction stage
of the business lifecycle. Since the business must spend a lot more in the nascent stage to
create awareness and build a customer base, this strategy helps in maintaining the
business cash flow.
However, the business owner must know that they can charge a premium only when they
are offering a high-quality and unique product. Customers will pay the high price only when
they believe that they are getting an extraordinary product.

6. Alternative Channels Strategy

As the name suggests, this strategy involves using alternative methods to reach the target
audience. For example, they can sell through other retailers like Woolworths and Coles.
Also, the advent of e-commerce platforms has allowed physical businesses to expand their
market and reach new customers online. It helps them to connect with buyers at any time
and from anywhere, which aids in expansion and higher sales.
If the business owner does not want to spend on creating an e-commerce website, they can
also sell through eBay, Gumtree, Amazon, etc. It requires no spending on setting up a
shipping channel and still makes higher profits. The business owner can also use paid
search ads to increase sales.

7. Acquisition Strategy

Many businesses take the path of acquiring another business to grow. It allows the
businesses to merge their talent, resources, stock, and policies to create a cohesive
organisation that becomes more powerful, productive, and prominent. It can be a
challenging process to complete the legal and financial formalities involved in the
acquisition. Thus, businesses should weigh the option thoroughly before buying a business
for sale in Sydney.
The acquisition strategy allows a small business to expand quickly with a diversified product
line and wider customer base. They should have the required funds to acquire the business
to make this strategy successful.
Conclusion
Growth is the most significant need of a business, and it can be achieved through a variety
of strategies. If you are planning to expand your venture, you can utilise any of these
approaches mentioned above to make your presence felt in the market.